The Finance Bill (No. 2) 2013 that was
recently passed in Dewan Rakyat on 5 December 2013 provided that
pre-retirement withdrawals (in full or partial) from PRS made before
reaching the age of 55 on the following grounds will be exempted from
the 8% tax penalty:
i. In the event of Death;
ii. Permanent departure from Malaysia;
iii. Permanent total disablement; (new addition)
iv. Serious disease; (new addition) or
v. Mental disability (new addition)
As the objective of PRS is to encourage
individuals to accumulate additional savings for retirement, any
pre-retirement withdrawal made before the age of 55 will be imposed with
an 8% tax penalty. Pre-retirement withdrawals are subject to the terms
and conditions as prescribed under the existing PRS Guidelines. PRS
members can only make pre-retirement withdrawals once a calendar year
from account B, which comprises up to 30% of his/her PRS account
balance.
The remaining 70% of an individual PRS
account balance under account A can only be withdrawn when the
individual reaches age 55, as prescribed under the current PRS
Guidelines without tax penalties.
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